The agriculture sector in India continues to be the backbone of the rural economy, employing close to 46 per cent of the workforce. However, its contribution to gross domestic product remains below 20 per cent. This persistent imbalance not only exposes the glaring structural inefficiencies in the sector but also calls for an urgent need for strategic recalibration. Budget 2026 offers a golden opportunity to reposition agriculture not merely as a subsistence sector but as a resilient, diversified, and value-driven engine of growth for creating ‘Viksit Bharat’.
There is a plethora of challenges, including fragmented landholdings (close to over 85 per cent of the farmers are small and marginal farmers), which lead to low scale of production, low productivity and inadequate infrastructure. These in turn cause significant post-harvest losses, market access challenges, price realisation problems and volatility, which affect farmer incomes. These are increasingly compounded by external shocks such as climate change, extreme weather events, and global events that, at times, affect domestic supply chains. The last few budgets have tried to address some of these issues through a pragmatic mix of tactical measures and forward-looking initiatives aimed at fixing some of these structural inefficiencies. However, given the gravity of these issues and the enormous potential of the sector that could be unlocked, what is required is a decisive shift towards long-term interventions that will build resilience while unlocking value across the agri and allied ecosystem.
Focus on climate
The first key expectation from Budget 2026 will be a sharper focus on climate adaptation and risk mitigation. The budget may allocate larger public investment in climate-resilient agriculture, covering drought-tolerant seeds, water-efficient cropping systems, regenerative agriculture and region-specific agronomic practices. The Budget may envisage launching “Climate Smart Districts Programme” wherein 200-250 districts can be converted to climate-smart agri zones with bundled interventions such as climate resilient seeds, micro irrigation, solar pumps, soil health restoration, etc., which can also be integrated with the district irrigation plans and State Action Plans on climate change. In addition, strengthening agricultural research and extension systems, particularly through climate-smart technologies and data-driven advisories, should be given more priority with higher outlay, which in turn can help farmers make informed decisions and improve their productivity and incomes. Crop insurance schemes may be re-examined, with a focus on improving coverage, transparency and timely payouts, ensuring that farmers are better protected against climate-induced losses.
The second key expectation will be initiatives aimed at prioritising crop diversification. India’s production patterns remain skewed towards water-intensive cereals, driven by historical procurement policies and price incentives. While these have played a role in ensuring food security, they have also led to ecological stress and limited income growth. Budget 2026 can accelerate a transition towards high-value crops such as pulses, oilseeds, fruits, vegetables and millets by aligning minimum support prices, procurement mechanisms and post-harvest infrastructure with diversification goals.
More importantly, dietary patterns point towards an increasing shift towards protein requirements. While the consumption and availability of proteins have grown, there are concerns regarding the required quality and its distribution, highlighting the need for dietary and crop diversification. Promoting nutri-cereals and horticulture will not only improve nutritional outcomes but also enhance farm incomes.
Another opportunity
Thirdly, the allied sectors—livestock, dairy, fisheries and forestry represent another opportunity. These sectors are more resilient to climatic variability and generate higher and more stable incomes, particularly for small and marginal farmers. While past budgets have laid emphasis on these segments, the upcoming budget may focus on dedicated steps for improvement, animal health infrastructure, cold chains and value-added processing, which can significantly enhance productivity and profitability. Cluster-Based Processing Zones for fruits, vegetables, dairy, fish and spices may be promoted using the Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme (PMFME) and Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) schemes. Adoption of plug-and-play infrastructure (sorting, grading, IQF, packaging) operated by private players under a PPP rental model, can be encouraged. This can result in farmgate-level value addition, reduction of logistics cost and boost to the levels of processing and exports.
Another key area the Budget may focus on is market reforms and value chain integration. Despite recent reforms, farmers continue to face price volatility and limited bargaining power. Focus could be on strengthening FPOs. The Budget may envisage launching ‘One FPO – One Market-Linked Product Programme’ – where each FPO may be assigned a single high-demand product (e.g., onions, tomatoes, milk, fish seed, turmeric) and held for a certain period. Given that a significant amount of horticulture products are also traded in APMC Mandis, the budget may as well earmark outlay for developing a few world-class APMCs, which can become models for the rest in the country.
Envisaging these initiatives
Fifth, technology adoption will be a critical enabler of this transformation. While the government has taken initiatives to strengthen the unified digital agriculture ecosystem (Agri Stack) to enable transparent price discovery, direct procurement, land records, extension services, input subsidies, better delivery of welfare measures, etc., here are a few initiatives which the upcoming Budget can envisage to accelerate adoption:
· Introduction of targeted digital equipment subsidies covering 30–40 per cent of costs for tools such as soil sensors, drones-as-a-service, micro-irrigation controllers, etc., routed through FPOs to ensure collective usage and lower individual expenses.
· Launching ‘Digital Farm Services Vouchers’ to let farmers access advisory apps, satellite-based crop insights, and AI-driven pest alerts at subsidised rates—similar to fertilizer or seed subsidies but for agri-tech services.
· Promoting shared tech centres at the panchayat level, equipped with drones, IoT kits, handheld testing devices, operated by trained rural youth or FPOs on a pay-per-use model.
· Enhanced budgetary allocations to support agri-tech startups, public-private partnerships, and strengthening last-mile digital infrastructure can be a welcome move to accelerate technology diffusion across farm sizes.
Finally, addressing rural incomes requires moving beyond production-centric policies to a broader rural development lens. Skill development, rural non-farm employment, and agri-based enterprises must be part of a holistic strategy. Linking agriculture with food processing, bio-energy, and rural manufacturing can create jobs and absorb surplus labour, easing pressure on farm incomes.
In essence, Budget 2026 presents an opportunity to move from short-term relief measures towards a coherent, future-ready agricultural strategy. By prioritising the above measures, the government can place agriculture and allied sectors on a more sustainable and income-enhancing trajectory. Such a recalibration is not merely desirable, but essential, for ensuring food security, nutrition, rural prosperity, and macroeconomic stability in the years ahead.
(The author is Partner, Food and Agribusiness, Business Advisory, BDO India. Views are personal)
Published on January 24, 2026
